Frequent Miler on the Air - Southwest takes the luv out of flying | Coffee Break Ep48 | 3-11-25

Episode Date: March 11, 2025

Starting May 28 of this year, Southwest will be making some major changes to the things we've known and loved. For example Most people will be losing free checked bags on Southwest starting May 28 of this year, they'll be introducing basic economy, flight credits will now expire (after 6-12 months depending on what type of fare you bought) and the value of points will become much more variable. (01:49) - Commenter Brad says: "I’m an accountant who completely understands the math of cutting expenses or raising revenues to increase profit... I don’t understand, though, what the business strategy is here. Building a strategy that revolves around hoping customers won’t notice you’re charging them more for a worse product doesn’t seem like the kind of pitch that would get you an A in an MBA strategy class." Read the original post where this comment appeared here. (03:38) - 2 Bags No longer Fly Free for Most (pricing not yet disclosed) (05:58) - Basic economy fares (06:33) - Flight credits will expire (From May 28, 2025) (08:29) - Variable redemption rates Visit https://frequentmiler.com/subscribe to get updated on in-depth points and miles content like this, and don’t forget to like and follow us on social media. Music Credit – Beach Walk by Unicorn Heads

Welcome to Coffee Break, where we focus on a single topic related to miles and points. And each coffee break is limited to 20 minutes or less for your money back. Southwest takes the love out of flying. Starting on May 28th, 2025, it has been announced that Southwest is completely destroying everything that you knew and loved about the airline if you loved them before because beginning on May 28th bags will no longer fly free for most customers. That's going to be completely changing and we'll talk more about what that means in a minute. They are also going to be introducing a basic economy type fare starting on May 28th.

We all love basic economy. Right, right. Yeah. So if you knew and loved that elsewhere, I guess you'll love it here, but it does not feel like the airline of love anymore. Flight credits are now going to expire. So if you loved the policy of flight credits never expiring that only began like within the last couple of years, I think, well, that's no longer going to be the case. They're going to be valid for either 6 months or 12 months,

depending on the type of fairy you bought and the value of your points will now become completely unpredictable with Southwest Airlines. Again, this all begins on May 28th and this comes on the heels of just last week. Southwest gutting its program on the earnings side where the less expensive fares want to get away and want to get away plus are now earning far fewer points than they were before all part of a huge cost cutting measure and of course on top of all of this we expect that they will begin charging for assigned seating at some point in the foreseeable future here so a lot of strange news coming out of Southwest. Yeah, I mean, Southwest has just, you know, taken all the things that people love about it and said goodbye to it all.

I don't get their business strategy here. I think it's doomed from the start, but I'm gonna read a comment from our post about these changes, because I thought Brad hit the nail on the head here. Brad writes, I'm an hit the nail on the head here. Brad writes, I'm an accountant who completely understands the math of cutting expenses or raising revenues to increase profit. I don't understand though what the business strategy is here. Building a

strategy that revolves around hoping customers won't notice you're charging them more for a worse product doesn't seem like the kind of pitch that would get you an A in an MBA strategy class. No, I don't think it is. You know, I think the thing here is we'll talk more about this, but I don't know that it's a strategy for making the business better as much as it is a strategy for making the business like everybody else. And it does seem like they're just copying what everybody else is doing. And in fairness, I guess the other airlines are all making it in the world. So maybe they're looking at what everyone else is doing and saying, well, if you can't, you know, can't beat them, join them.

And I guess that's the strategy. But I agree with you, Brad. It definitely takes everything that made Southwest different. They gave me a reason to choose them and takes it away. So now I have no reason to choose them over somebody else. Yeah, it totally. And the idea that, you know, yes, some other regular airlines are making it, but, you know, it's not like it's easy to to be successful as an airline. And now to say we're gonna copy what others are doing without any experience doing it

and somehow do it well enough that people will choose us over them, I just don't see this working at all. So that's my prediction anyway. But let's go over the details of what these changes mean. Yeah, so starting on May 28th, and this is applicable to tickets booked starting on May 28th. So if you book your ticket before May 28th, and this is applicable to tickets booked starting on May 28th.

So if you book your ticket before May 28th of 2025, you'll still have your bags flying free and all the things that you're used to. However, starting on May 28th, two bags will no longer fly free for most people. Now some people will still get free checked bags. If you're an A-list preferred member, you buy a business select fair, you're still going to get your two free checked bags. And other elite members like A-list members member, you buy a business select fare, you're still going to get your two free checked bags. And other elite members like A-list members are going to get one free checked bag. Credit card holders are apparently going to get a free checked bag also.

But most people, everybody else basically, is going to see no checked bags included with their fare unless again you buy the business select fare. So whether you buy one to get away, one to get away plus or any time faresres and actually I should restate that because want to get away is going away. It's going to become basic. So whether you buy basic want to get away plus anytime or fares, you're not going to get any checked bags included on those apparently, which that's just a huge seismic change in the way that Southwest does business and not only in the way that they do business, but in the way that they said they were going to continue to do business not that long ago, right?

Right, right. They've repeatedly said, we're going to continue to offer two free free check bags. And it just shows that their word, their password isn't worth anything anymore. They did the same thing with the point earning on unpaid flights. They it was less than six months ago. They said in writing that they weren't going to change that and yet they did. So yeah, not loving it Southwest. Disappointing.

And I get a big change because that's a reason why some people would choose Southwest. Certainly in my family, we've chosen Southwest for a long time because of the free bag policy. So that one kind of stings. We don't yet know, by the way, how free check bags will apply. Some people have asked, like if a companion pass holder has elite status, will their companion get a free check bag? Or if you have a credit card, is the free check bag going to apply to you or everybody on your itinerary?

We don't yet know how that stuff is going to work. We don't yet know what it's going to cost, whether that's going to be dynamic or static in terms of the cost to check a bag. So we don't have a lot of information about that yet. We just know that starting on May 28th, it's not going to be free anymore. And that's a huge change, but that's not the only huge change coming. No. So they also announced that basic economy fairs are coming. We don't have any details about that yet, but what that probably means is when they introduce assigned seating for people, it probably means if you have basic economy,

you're not gonna get assigned seat. It probably means some other restrictions, but we don't know yet what they are. Like some airlines, for example, don't allow carry-on bags as part of a base economy. So hopefully they're not gonna do that, but we'll see. We don't know.

One thing we do know about those basic fares is what's gonna happen if you book one and then cancel. So before May 28th, if you book a paid flight and you cancel it, you get a flight credit that never expires. However, starting with bookings made on May 28th, if you book a paid flight, you cancel it, you get a flight credit that never expires. However, starting with bookings made on May 28th, 2025, if you make a booking and then you cancel it, and I'm talking about a paid fare here, not an award ticket, if you pay cash for your ticket and then you cancel it, you're going to have a Southwest credit that does expire. And if it's a basic fare, it's going to expire in six months. All the other fares are valid for 12 months.

Now I say all the other fares. If you look at any time or business select, of course, those are refundable. Uh, so really comes down to basic is going to be a, uh, a six month window and then, and then 12 month window for the others. If you choose for them to hold it as a credit. Um, again, I think if you book a business select, you could choose for Southwest to hold it as a credit, but then it's only going to be valid for 12 months. So you probably wouldn't want to do that.

But yeah, big restriction on the basic ones because a credit that's only valid for six months. I mean, that that could really be hard to use for some people. Yeah, that said, in Southwest defense, a lot of basic economy fairs are completely nonrefundable, or you have to pay a hundred100 or $200 fee in order to get anything back from it. So I'll give Southwest some credit for this one, not unlimited credit, but about six months of credit for doing something that's maybe a little bit better than some other airlines

do. A little bit better than some airlines do, but a lot worse than it's worked for the last couple of years. 100% true. As it stands, as we record this, if you were to book the cheapest fare possible and cancel it, you get a credit that never expires. And if you book a want to get away plus fare, you get a credit that never expires and is transferable to anybody. But starting on May 28th, that credit will only be valid for a year. Now I think it will still be transferable if you've booked a want to get away plus or higher,

but but again only valid for 12 months. So that stinks. And then the final piece of the puzzle here, which we know very little about, but makes me also very nervous for the value prop here is that Southwest quote will also introduce variable redemption rates across higher demand and low demand flights. And so what that translates into, I think, is that award pricing is no longer going to be tied to the cash price. It's just going to be variable and potentially all over the place. Yeah, right. All we could do is is speculate here what it's gonna what's that that's gonna really mean. You know, some people

are predicting that what this means is for lower demand flights, you'll get better value for your points and for higher demand, you'll get worse value. So I see some, I see, I've got my glass half full here, which is that Southwest, because of these other changes, most of their flights are going to become low demand and therefore their points will be worth more. We can help. We can help. Well, I mean, it's not a bad point that if you're able to travel at off peak times, you'll probably be able to get outsized value for your points as compared to booking travel at peak times. But it's a big bummer for folks that have to travel during peak time, certainly anybody who's beholden to the school schedule, it seems likely that points will become worth less than

they are now. I know. And that's, that's really awful, because that's when most people travel during peak times, by definition. So that does mean that most customers will be getting less value for their points and that's terrible. Now people who listen to podcasts like ours and pay attention to these things might then be able to save their points for when they're more valuable and use them then.

And so that's a little bit of hope there that maybe you can do something to actually get better value for your points, besides just hoping that all Southwest flights have our lower demand, which. Which doesn't seem far fetched necessarily, but another area where we don't know anything yet, but I'm at least slightly encouraged by the fact that there was nothing announced is that there haven't been any changes announced to the

Southwest Companion Pass. So nothing mentioned anyway about changes coming to that. But I'm curious, what do you think? Do you think that there's a change likely to be coming to that? Or do you think it will continue to work? No, I don't think so. I think that's their one remaining selling point is that it's possible to get this companion pass and they've been advertising it like crazy in different ways with different promotions. So I can't see them investing so much

in all those different promotions for getting the companion pass easier if they were planning to get rid of it. So that's my guess is that it's going to stick around. I hope you are correct. You know, I think that what it feels like here is I see different forces at play because I mean, Southwest has also spent a lot of money for a long time marketing two bags fly free. And if they knew for a long time that they were gonna eliminate that, you would think they would have pared down on that a little bit over time

in the signage and airports and everything else. It seems to me like there's a difference between the airline folks and whoever's making the decisions. And I say that because there's been this activist investor group that has taken in a large ownership stake and seems to be driving decisions that seem to go contrary to the culture that Southwest has long had and all the time and effort that they've poured into building a brand identity that apparently whoever's making the big decisions just doesn't care about that.

It seems that way. And I read Stephen's post about these changes and he has a whole section speculating on like, what's gonna happen with the flight attendant culture? Because one of the things that makes Southwest unique is that the flight attendants seem to really enjoy their job. They often make flights really fun, and will that stay? Will that last when it's becoming a bean counter culture, it seems to be. And so it seems to

me very unlikely that that will last because someone has to prioritize that to keep that going, right? I mean, that kind of thing doesn't just happen on its own. That's because the company made a very deliberate effort to encourage that. I don't see that happening going forward is my guess. And my prediction is I can't see Southwest doing well financially with all these changes. I just think that it's gonna drive away customers and their best hope will be that

they get a good suitor to actually buy them. I'm going to give a slightly different but ultimately same prediction. Okay, I don't know that this is going to financially hurt them as much as one may think off the bat. I think they're loyal customers like me are gonna be very turned off by this and unhappy however, I think that all of the people who Sort of turn their nose up at Southwest and say they're never gonna fly Southwest because Southwest doesn't have assigned seating and doesn't have you know

They don't like the cattle call and they don't like that. There are an elite enough elite benefits and that sort of thing. I think some of those people will probably come over when everything is more similar to the experience that they enjoy and appreciate at their airlines. So I don't know if this is going to be a huge financial hit, but I do think ultimately that the goal here has to be some sort of a merger. And I'm thinking that the goal, my guess is the goal is to make them as similar as possible to other airlines so that it's as easy as possible to sell that as some sort of a merger. Whereas up until now, Southwest has been so clearly

different from everybody else that trying to sell another company on another airline on a merger with them would have involved merging two entirely different company cultures and outlooks and business models. But if you similarize it enough to everyone else's business model, it makes it, I think, a little bit easier to get someone like, I don't know, an American Airlines or a Delta or a Unite or whoever might be interested in making a purchase because now it's not so a bigger hurdle or a decision about are you going to destroy the brand or are you going to keep the brand and keep it separate from your main brand and blah, blah, blah.

We've pre-destroyed the brand for you, don't worry. Right, right. Right, I mean, I, I wouldn't, that's gotta be the strategy here, right? I don't know, it doesn't have to be. That's so funny. If that's, I don't know about that, but if that's actually the strategy,

then I would change my opinion about the companion pass because that would be a big liability for a suitor to take on. And so I could see that going away. But the flip side is they could keep it until some kind of merger agreement is announced and then say, so existing companion pass holders will still get it until their their term runs out and then it'll and then there won't be an opportunity to get it going forward. Yeah, I mean, I don't think we're gonna see something on it right away, but I'm nervous about the future of the companion pass. We'll see but in bright news again, maybe you'll get some more value out of your points now and then maybe

That's about as bright as it's gonna get here folks. I think That there you have it there. You have it. That's the news from as it's gonna get here folks, I think. So there you have it. There you have it. That's the news from Southwest. Don't forget, if you've enjoyed this and you'd like to get on our email list, you want to go to frequentmiler.com slash subscribe to join our email list. Follow us on all the various social media and check out our Frequent Miler on the Air episodes dropping every Friday.